STATE OF ILLINOIS CHIEF PROCUREMENT OFFICE

SMALL BUSINESS SET-ASIDE PROGRAM

ANNUAL REPORT FISCAL YEAR 2016

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

Fiscal Year 2016: A Brief Overview Chief Procurement Officer General Services (CPO-GS)

920 unique SBSP vendors receiving contract payments -47.2% decrease in the number of unique SBSP vendors receiving contract payments compared to Fiscal Year 2015 $96,810,791 total value of payments to SBSP vendors -15.7% decrease in total value of set-aside payments compared to Fiscal Year 2015 1.3% payments to SBSP vendors as a percent of total spend by state agencies under the authority of the Chief Procurement Officer General Services (CPO-GS) and transacted under the requirements of the Illinois Procurement Code +11.5% increase in the percent of payments to SBSP vendors as a percent of total spend by state agencies compared to Fiscal Year 2015 (last year payments as a percent of total spend was 1.2%, so this statistic is less impressive than it may first seem) 185 unique SBSP vendors that received set-aside contract payments and that are also certified in the Business Enterprise Program (BEP) -14.0% decrease in the number of unique SBSP vendors also certified in BEP receiving contract payments $48,391,431 total value of payments to SBSP vendors also certified in BEP -27.6% decrease in total value of set-aside payments to SBSP vendors also certified in BEP compared to Fiscal Year 2015

Only small businesses based in Illinois may participate in the

Small Business Set-Aside Program (SBSP)

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

Setting-aside Contracts for Illinois’ Small Businesses Maximizes Tax Dollars When the State procures from small businesses registered in the Small Business Set-Aside Program (SBSP), a significant economic benefit occurs: taxpayer dollars remain in Illinois communities and the state longer than if buying from out-of-state vendors. Some economists call this the “multiplier effect”. In a study comparing the economic impact of ten Andersonville, Illinois businesses and their chain com-petitors, the Andersonville Development Corporation found that for every $100 in consumer spending with a local firm, $68 remains in the area economy compared to $43 when spent with a chain firm.

A set-aside simply limits

the pool of vendors eligible to compete for contracts, but still promotes competition

“Small businesses” are inde-pendently owned and operated and are not dominant in their field of operation. Additional criteria: 1. Illinois business 2. Annual gross sales:

Wholesale $13,000,000 or less

Retail or Service $8,000,000 or less

Construction $14,000,000 or less

Manufacturing 250 employees or less

30 ILCS 500/45-45

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

CPO-GS Set-Aside Spend Year Over Year Comparison $ Total Agency Expenditures under Chief Procurement Officer for General Services (CPO-GS) FY12 $7,815,977,945 FY13 $8,042,100,203 FY14 $9,666,808,789 FY15 $9,913,475,446 FY16 $7,491,856,621 $ Total SBSP Expenditures FY12 $64,961,275 FY13 $80,462,026 FY14 $165,926,193 FY15 $114,906,261 FY16 $96,810,791 % of Total Agency Expenditures Going to SBSP Vendors FY12 .83% FY13 .99% FY14 1.72% FY15 1.16% FY16 1.29% $ Total SBSP Expenditures Going to Business Enterprise Program (BEP) Vendors Enrolled in SBSP and % of Total SBSP Expenditures Going to BEP Vendors Enrolled in SBSP FY12 $42,525,150 69.7% FY13 $41,678,354 51.7% FY14 $66,864,891 40.3% FY15 $60,540,308 52.7% FY16 $48,391,430 50.0%

Through SBSP, the Chief Procurement Office

and state agencies use targeted contracts to drive economic growth

in Illinois’ cities and towns

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

Spend with SBSP Vendors also BEP Certified

Minority Business Enterprise (MBE) FY12 $22,431,894 FY13 $21,270,755 FY14 $22,716,960 FY15 $27,688,793 FY16 $24,109,552

Female Business Enterprise (FBE) FY12 $19,845,328 FY13 $19,924,373 FY14 $43,053,068 FY15 $31,860,569 FY16 $23,812,135

Person with Disability Business Enterprise (PBE) FY12 $247,927 FY13 $483,226 FY14 $1,094,862 FY15 $990,946 FY16 $469,743

More than 2,100

small business owners have registered for SBSP

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

BEP Certified

185 BEP vendors received contract payments resulting from the Small Business Set-Aside Program; they represent 20.1% of all SBSP vendors receiving payments. BEP vendors are at least 51% owned and controlled by persons who are minority, women, or have a disability.

Behind the Numbers The State of Illinois operated without a budget during Fiscal Year 2016. While it was difficult to know the specific effect of the budget impasse on the Small Business Set-Aside Program’s (SBSP) outcomes, anecdotal and some hard evidence suggests that the lack of payments to small businesses caused a decrease in number of available set-aside contracts, reduced the number of bidders for available con-tracts, and increased costs to state agencies. There are five elements that impact SBSP spend: (1) knowledge by agency buyers on how to procure through the set-aside program, (2) regulation and monitoring by the Chief Procurement Officer for General Services (CPO-GS) of set-aside transactions, (3) the quality of set-aside contracts, (4) the quan-tity of set-aside contracts, and (5) the participation of SBSP vendors. The first three elements were not significantly different between FY 2015 and FY 2016. But element #4, the quantity of available set-aside contracts, may have been reduced since total spend by state agencies went down 24.4%. Additionally, SBSP participation changed in a predictable way.

In Fiscal Year 2016

920 SBSP businesses in

Illinois won contracts to provide state agencies with goods and services

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

While the average number of registered SBSP vendors remained constant at approximately 2,000 busi-nesses, their participation in the set-aside program waned. Often citing the inability to go months with-out receiving payment from the State, many vendors either raised the price of their bids or elected to not submit bids. Both options may be evidenced by a 4.3% increase in the dollar value of granted SBSP waivers. When a state agency has a legitimate reason for not using an SBSP vendor (including that no SBSP vendors submitted bids or their bids were unreasonably high) on a set-aside contract, then a State Purchasing Officer may grant a waiver.

Higher Education The Illinois public universities do not utilize a small business set-aside program. Additionally, there is

no standard or complete database of information regarding contracts awarded to small businesses by

the universities, making it difficult to obtain and report this data. Each university maintains separate

procurement and accounting systems, collects data differently and has different capabilities for ex-

tracting data. The CPO-HE encourages universities to utilize small businesses whenever possible and

the universities do contract with many small business vendors. This information is reported in the

Small Business Contracts Act Report that is due in the spring.

Those contracts retained jobs, created new ones, purchased raw

materials, financed capital equipment, and paid taxes

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

Capital Development Board The Capital Development Board (CDB) has a long history of utilizing small business firms in the design and construction of the State’s buildings. When one of the State’s 8,400 properties requires repair or renovation, CDB manages the project. Many projects involve modernizing facilities to meet accessibil-ity standards and protecting the lives and safety of Illinois residents by removing such environmental hazards as asbestos and lead. Since CDB’s percentage of contracting with small businesses continually exceeds the 10% statewide

goal and most CDB vendors are small businesses, the Chief Procurement Officer for the Capital Develop-

ment Board (CPO-CDB) has not established a small business set-aside. CDB and the CPO-CDB routinely

measure the overall pool of prequalified vendors, as well as those who receive contracts, to evaluate

the need for a set-aside program. Nearly all of the CDB’s contracts are awarded to vendors that are

prequalified to bid by the CDB.

In Fiscal Year 2016, 67% of all CDB prequalified firms are small businesses. In Fiscal Year 2016, seventy

five contracts representing 76% of CDB contracts awarded were awarded to small businesses.

Those state contracts were valued at

$96,810,791

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

The total spend with small business is as follows:

*$8,019,452 Spend with small businesses also certified in the BEP Program

Fiscal Year 2016 participation data indicates that:

Most prequalified vendors are small businesses CDB awards most contracts to small businesses CDB exceeds small business participation goals

The CPO-CDB continues to monitor the value of contracts awarded to small business to evaluate the need for a set-aside program. The FY16 performance of 42% of total spend to small business is an increase from prior years. This participation level does not include the participation by subcontractors on construction projects, most of which are small businesses. As a result, actual participation of small businesses is much larger than just the participation by prime contractors identified in this report. The CPO-CDB and CDB recognize the vital role small businesses play in CDB projects at the subcontrac-tor level and believe they should be counted in the achievement numbers. Regardless of the method for delivering a project, vertical construction is largely performed through tiers of subcontractors and material suppliers, the majority of whom are likely to be small businesses. The CPO-CDB has encour-aged CDB to track and calculate the role small businesses play in CDB projects at the subcontractor lev-el. The CPOs continue to encourage legislative changes that will recognize all small business participa-tion by including subcontractor contracts in the overall participation measurement.

Fiscal Year Contract Type Total Spend $ Total Spend $ to

Small Business

Percentage of

Contracts

FY 2014 Total $213,116,530 $60,347,095 28.3%

FY2015 Total $300,833,450 $56,187,474 18.7%

FY2016 Architects/Engineers $2,179,895 $2,047,123 91%

FY2016 Contractors $61,207,300 $24,496,699 40%

FY2016 Total $63,387,195 $26,543,823* 42%

100% of state agencies

are participating and attempting to procure through SBSP

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

Agency Small Business Spend Year Over Year Comparison

185 SBSP businesses that are

also certified in the Business Enterprise Program (BEP) won contracts

State Agency FY13 FY14 FY15 FY16

AGING $103,894 $123,550 $242,503 $11,331

AGRICULTURE $1,249,192 $1,273,566 $1,444,815 $315,473

ARTS COUNCIL $71,000 $39,625 $52,929 $741

BOARD OF HIGHER EDUCATION $0 $60,071 $21,404 $1,593

BOARD OF ELECTIONS $0 $0 $277,843 $176,795

CENTRAL MANAGEMENT SERVICES $9,839,054 $21,016,192 $20,255,291 $10,737,289

CHILDREN AND FAMILY SERVICES $2,099,615 $3,587,163 $2,292,753 $2,998,476

CIVIL SERVICE COMMISSION $0 $3,075 $106 $0

COMMERCE AND ECONOMIC OPPORTUN $243,950 $108,209 $0 $163,475

COMMERCE COMMISSION $18,477 $130,863 $152,691 $133,055

COMMUNITY COLLEGE SYSTEM $2,284 $6,628 $24,943 $569

CORRECTIONS $11,436,824 $17,632,684 $15,216,187 $3,819,179

COUNCIL ON DEVELOPMENTAL DISAB $13,644 $18,134 $2,838 $2,389

CRIMINAL JUSTICE INFO. AUTHORITY $39,487 $20,495 $28,085 $150,000

DEAF & HARD OF HEARING COMM $7,960 $28,655 $16,840 $3,705

EDUCATIONAL LABOR RELATIONS BOARD $32,516 $20,666 $19,341 $1,458

EMERGENCY MANAGEMENT AGENCY $521,653 $520,383 $379,894 $717,089

EMPLOYMENT SECURITY $206,381 $1,576,580 $1,235,070 $2,500,877

ENVIRONMENTAL PROTECT AGENCY $756,572 $842,529 $1,277,487 $3,099,413

EXECUTIVE ETHICS COMMISSION $10,673 $1,821 $2,566 $0

FINANCIAL AND PROFESSIONAL REG $1,347,880 $1,843,594 $577,663 $161,990

GAMING BOARD $35,356 $44,745 $73,274 $110,895

GUARDIAN & ADVOCACY COMM $20,000 $17,620 $0 $0

HEALTHCARE & FAMILY SERVICES $5,422,685 $6,040,622 $3,276,574 $1,790,985

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

Those SBSP contracts won by BEP businesses were valued at

$48,391,431

State Agency FY13 FY14 FY15 FY16

HISTORIC PRESERVATION AGENCY $450,000 $1,057,343 $131,643 $0

HUMAN RIGHTS $80,231 $0 $0 $0

HUMAN RIGHTS COMMISSION $4,495 $0 $0 $0

HOUSING DEVELOPMENT AUTHORITY $220,828 $296,064 $91,216 $50,649

HUMAN SERVICES $11,984,126 $15,099,858 $8,430,879 $7,478,954

INSURANCE $107,661 $279,608 $152,509 $120,274

JUVENILE JUSTICE $860,534 $1,127,159 $1,168,610 $678,439

LABOR $22,270 $13,900 $0 $15,064

LOTTERY $322,420 $0 non responsive $221,681

MATH AND SCIENCE ACADEMY N/A N/A N/A $878,615

MILITARY AFFAIRS $1,907,649 $2,182,831 $1,969,532 $1,051,585

NATURAL RESOURCES $3,739,397 $4,529,089 $5,385,609 $361,563

OEIG $6,402 $2,846 $0 $0

OFFICE OF THE STATE FIRE MARSH $672,221 $590,770 $68,553 $120,234

PRISONER REVIEW BOARD $1,193 $10,711 $1,874 $1,879

POWER AUTHORITY $0 $0 $275 $0

PUBLIC HEALTH $1,646,606 $1,148,195 $639,282 $503,713

RACING BOARD $0 $14,400 $0 $8,365

REVENUE $1,862,998 $2,080,542 $811,422 $415,876

STATE BOARD OF EDUCATION $582,597 $222,061 $2,078,726 $4,299,996

STATE POLICE $2,585,209 $1,677,795 $1,829,064 $377,552

STATE POLICE MERIT BOARD $0 $0 $36,440 $0

STUDENT ASSISTANCE COMMISSION $101,810 $1,836,879 $2,302,366 $958,726

TOLL HIGHWAY $7,435,709 $9,561,942 $27,092,326 $31,622,893

TRANSPORTATION $7,216,076 $62,756,526 $9,282,806 $48,897,341

VETERANS' AFFAIRS $5,104,464 $6,413,821 $6,562,032 $6,107,536

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State of Illinois Chief Procurement Office

Fiscal Year 2016 Small Business Set-Aside Annual Report

CHIEF PROCUREMENT OFFICERS Ben Bagby Ellen H. Daley Margaret van Dijk Higher Education General Services Capital Development Board

VISIT US Chief Procurement Office 401 South Spring Street 514 Stratton Office Bldg. Springfield, Illinois 62706 www.cpohe.illinois.gov www.cpogs.illinois.gov www.cpocdb.illinois.gov www.illinois.gov/cpo/pathwaytoprocurement

CONTACT US Call: 217.558.2231 Email: eec.smallbusiness@illinois.gov

Chief Procurement Office Contact Information

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OUR MISSION & VALUES

To work with agencies and universities to meet their procurement needs while exercising independent authority, oversight, and approval

designed to continuously improve the procurement process and ensure: compliance with law, fair treatment, diversity, integrity, transparency and value.

HOW DOES A BUSINESS APPLY FOR SBSP?

To participate in SBSP, businesses must complete an application in the Illinois Procurement Gateway at https://ipg.vendorreg.com. When applying, the business must be registered with other State of Illinois agencies as necessary to conduct business, including the State Board of Elections, Department of Human Rights (to obtain a Public Contract Number), and the Secretary of State. Need help applying for the SBSP? 1:1 Assistance is available. We like to be helpful. Call us: 217.782.1270 Email us: IPG@illinois.gov

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